******************************************************** NOTICE ******************************************************** This document was converted from WordPerfect to ASCII Text format. Content from the original version of the document such as headers, footers, footnotes, endnotes, graphics, and page numbers will not show up in this text version. All text attributes such as bold, italic, underlining, etc. from the original document will not show up in this text version. Features of the original document layout such as columns, tables, line and letter spacing, pagination, and margins will not be preserved in the text version. If you need the complete document, download the WordPerfect version or Adobe Acrobat version, if available. ***************************************************************** Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of ) CUID Nos. NJ0578 (Hopewell) ) NJ0592 (Stockton) Suburban Cable TV Company, Inc. ) NJ0593 (West Amwell) ) NJ0607 (Delaware) Complaint Regarding ) Cable Programming Services Tier Rates ) and ) Petition for Reconsideration ) ORDER ON RECONSIDERATION AND RATE ORDER Adopted: May 20, 1999 Released: May 26, 1999 By the Deputy Chief, Cable Services Bureau: I. In this Order we consider a complaint against the October 15, 1998 rate increase of the above- referenced operator ("Operator") for its cable programming services tier ("CPST") in the community of Stockton, New Jersey ("Stockton"). We have already issued an order in which we dismissed prior complaints against Operator's CPST rates in all of the communities referenced above ("Prior Order"). On June 15, 1998, the local franchising authority ("LFA") filed a petition for reconsideration ("Petition") of our Prior Order. The Operator filed an opposition to the Petition on June 24, 1998 ("Opposition") and the LFA filed its reply to the Opposition on July 6, 1994 ("Reply"). This Order addresses the Petition, Opposition and Reply as well as the reasonableness of Operator's October 15, 1998 rate increase in Stockton. 2. Under the Communications Act, the Federal Communications Commission ("Commission") is authorized to review the CPST rates of cable systems not subject to effective competition to ensure that rates charged are not unreasonable. If the Commission finds a rate to be unreasonable, it shall determine the correct rate and any refund liability. The Telecommunications Act of 1996 ("1996 Act") and our rules implementing the new legislation ("Interim Rules"), require that complaints against the CPST rates be filed with the Commission by an LFA that has received more than one subscriber complaint. 3. The LFA filed a complaint with the Commission on March 24, 1999 against Operator's October 15, 1998 CPST rate increase from $11.42 to $13.62 in Stockton. The LFA verified that it received more than one subscriber complaint for the franchise area and that the first valid complaint for the franchise area was received by the LFA on January 5, 1999. The filing of a complete and timely LFA complaint triggers an obligation upon the cable operator to file a justification of its CPST rates. The Operator has the burden of demonstrating that the CPST rates complained about are reasonable. 4. To justify rates for the period beginning May 15, 1994, operators must use the FCC Form 1200 series. Operators may adjust their rates on an annual basis using the FCC Form 1240 to reflect reasonably certain and quantifiable changes in external cost, inflation, and the number of regulated channels that are projected for the twelve months following their rate change. Any incurred cost that is not projected may be accrued with interest and added to rates at a later time. 5. In our Prior Order, we dismissed complaints filed by the LFA against the CPST rates charged by Operator in the communities referenced above, because the complaints were not timely filed within 45 days of a rate change. In its Petition, the LFA argues that our Prior Order contradicts another Order, DA 97-1986 ("Lambertville Order"), and that our finding in the Lambertville Order should be applied to three of the communities in our Prior Order because they are part of the same system as Lambertville. The Lambertville Order resolved a valid complaint filed on October 14, 1993 against the CPST rates charged in Lambertville only. If similar complaints had been timely filed against the CPST rates charged in the other three communities, and the Operator responded to all of the complaints with a system level filing which included the three communities, then it is possible that a single order could have resolved the consolidated complaints. However, that is not the case here and we decline to interpret the Lambertville Order as applying to the three additional communities. The LFA also argues that the Lambertville Order was incorrectly decided because we found the CPST rate of $9.50 for Lambertville City to be reasonable when the Operator was actually charging $10.39. Because the LFA did not file a timely appeal of the Lambertville Order, we will not now revisit the factual findings in that Order to determine whether it was correctly decided. 6. In its Petition, the LFA claims that the complaints which were dismissed by our Prior Order were timely filed and should not have been dismissed. The LFA argues that because the Operator did not file its FCC Form 1200 with the LFA until October 14, 1994, the LFA had 45 days from November 14, 1994 to file its complaint with the Commission. The LFA argues that it should be allowed to file a complaint against the CPST rate justified by Operator's FCC Form 1200 even if Operator had no actual rate change. The LFA may review Operator's FCC Form 1200 to determine if Operator's basic service tier ("BST") rates are reasonable. However, the Operator was not under an obligation to file the FCC Form 1200 with the Commission unless there was a pending complaint. The Commission rule in effect at the time the LFA filed its complaints stated that "a complaint regarding a rate for cable programming service . . . in effect on September 1, 1993, must be filed by February 28, 1994". Operator's CPST rates did not change between September 1, 1993 and February 10, 1995. If the LFA had filed a timely complaint against Operator's September 1, 1993 CPST rate, then the Commission would have had continuing jurisdiction to review Operator's FCC Form 1200. Because that did not happen in the instant case, we will deny Operator's Petition. 7. In response to the LFA complaint against Operator's October 15, 1998 CPST rate increase in Stockton, Operator filed FCC Form 1240 as an unregulated operator, in accordance with Implementation of Sections of the Cable Television Consumer Protection and Competition Act of 1992: Rate Regulation, Thirteenth Order on Reconsideration, MM Docket No. 92-266 ("Thirteenth Reconsideration Order") and the FCC Form Instructions. Upon review of Operator's FCC Form 1240 for the projected period October 1, 1998 through September 30, 1999, we find Operator's calculated maximum permitted rate ("MPR") of $13.26, effective October 1, 1998, to be reasonable. Because Operator's actual CPST rate of $13.62 exceeds its MPR, we find Operator's actual CPST rate of $13.62, effective October 15, 1998, to be unreasonable. 8. Accordingly, IT IS ORDERED, pursuant to Section 1.106 of the Commission's rules, 47 C.F.R. 1.106, that the LFA's Petition for Reconsideration, IS DENIED. 9. IT IS FURTHER ORDERED, pursuant to Section 0.32l of the Commission's rules, 47 C.F.R. 0.321, that In the Matter of Suburban Cable TV Company, Inc., DA 98-890, 13 FCC Rcd 11108 (1998), IS AFFIRMED. 10. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R. 0.321, that the CPST rate of $13.62 charged by Operator in Stockton, effective October 15, 1998, IS UNREASONABLE. 11. IT IS FURTHER ORDERED, pursuant to Section 76.961 of the Commission's rules, 47 C.F.R. Section 76.961, that Operator shall refund to subscribers in Stockton that portion of the amount paid in excess of the maximum permitted CPST rate of $13.26 per month (plus franchise fees), plus interest to the date of the refund, for the period beginning January 5, 1999 (the date of the first subscriber complaint) through the day before Operator implements the maximum permitted rate of $13.26. 12. IT IS FURTHER ORDERED that Operator shall promptly determine the overcharges to CPST subscribers for the stated period and shall within 30 days of the release of this Order, file a report with the Chief, Cable Services Bureau, stating the cumulative refund amount so determined (including franchise fees and interest), describing the calculation thereof, and describing its plan to implement the refund within 60 days of Commission approval of the plan. 13. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R. Section 0.321, that the complaint against Operator's October 15, 1998 CPST rate increase in Stockton, IS GRANTED. FEDERAL COMMUNICATIONS COMMISSION William H. Johnson Deputy Chief, Cable Services Bureau